EXCLUSIVE: Independent South Australian Senator Nick Xenophon will resume his fight against organised crime gangs using poker machines to launder money in the Senate next week.

Senator Xenophon told news.com.au he intends to revive a bill he first introduced in 2012 which aimed to close a loophole allowing criminals to launder large sums of money through poker machines.

The move comes as the government’s money laundering intelligence agency, the Australian Transaction Reports and Analysis Centre (AUSTRAC), revealed a “significant increase” in the number of suspicious activity reports around the machines.

Currently poker machine operators are required by law to report any payout over $10,000 to AUSTRAC. Any amount over the threshold limit must also be paid to the winner by cheque. The Anti-Money Laundering Amendment (Gaming Machine Venues) Bill 2012 sought to lower the AUSTRAC reporting threshold to $1,000.

The bill was first introduced by Senator Xenophon in October 2012 but failed to gain support from the then-government and so was never debated or voted on in Parliament. The bill lapsed after the election and was restored to the notice paper in December last year.

Senator Xenophon intends to use his scheduled debating session next Thursday — one of only a few he is allotted each year — to bring the bill on for a second reading debate.

“This is an issue now more than ever, to ensure criminals and drug dealers aren’t laundering money through poker machines,” Senator Xenophon said. “If poker machines are being used as a mechanism to launder funds from criminal activity then surely that’s something the operators should be concerned about.”

Senator Nick Xenophon will bring on the bill for debate next week.Source:News Corp Australia

He described the proposed changes as “pretty pragmatic and sensible”. “There aren’t that many big jackpots anyway so the administrative burden would be very little,” he said. “Instead the clubs and poker machine operators said [last time] it’s not necessary, that there’s no issue.”

Senator Xenophon said he was challenging the industry to support the legislation this time around. “This is an easy way to launder money and these changes would make it more difficult, so why would the industry want to stand in the way?”

“This bill has been rejected by the Parliamentary Joint Select Committee for Gambling Reform, and its introduction would only heap further regulatory burdens on clubs, which already have significant anti-money laundering compliance measures in place despite their low risk profile.”

Mr Ball reiterated an earlier assertion that anyone attempting to launder money through poker machines “would have to be the world’s dumbest criminal” due to the presence of CCTV cameras and existing identification requirements. “The only criminal who would try to do this is one who was desperate to get caught,” he added.

Adam Masters, a researcher with the Transnational Research Institute on Corruption at the Australian National University, said lowering the threshold would “definitely have an effect” on the profitability of money laundering operations for minimal administrative burden on venues.

He said the current limit was too high and easily facilitated the common laundering technique called ‘smurfing’, where a number of people are paid several hundred dollars to insert just under $10,000 into a machine, play until they win, and then cash out.

“The $10,000 reporting limit is quite a lot of money,” Mr Masters said. “If you have 10 people all dealing with $9,900, that’s $99,000 laundered in a short amount of time. If you bring it down to $1,000 you’re going to have pushback from the clubs, but that’s the cost of doing business.”

Mr Masters said people were “literally throwing money” at the clubs. “So what if they have to do a little bit more to have money thrown at them? I would come down on the side of, if you can make it more difficult to make criminal activity profitable, make it more difficult.”

AUSTRAC could not disclose how much money it estimates is laundered through poker machines, but said it had seen a “significant increase” in suspicious matter reporting in recent years. “AUSTRAC has undertaken focused regulatory activities in the pubs and clubs sector around suspicious matter reporting over the past few years,” AUSTRAC chief executive John Schmidt said.

“By consulting with our partner agencies in law enforcement, AUSTRAC has been able to identify patterns of behaviour that potentially constitute money laundering in hotels and clubs operating electronic gaming machines. Regulatory engagement with the licenced venues, including sharing examples of risky patron behaviour, has helped to improve awareness and identification of potential money laundering activity.

“This work, coupled with the provision of specific guidance to industry, has created greater awareness of the money laundering risks in the industry and has resulted in a significant increase in suspicious matter reporting being received by AUSTRAC.”

A spokesperson for the Australian Federal Police said targeting money laundering was a key method used by the AFP in the fight against organised crime. “The methods by which money may be laundered are varied and can range in sophistication. Organised criminal syndicates use a variety of methods and avenues, including matters involving the gaming sector,” the spokesperson said.

“The AFP continues to work with AUSTRAC and state and territory police to combat the money laundering activities conducted by organised criminal syndicates. Both state and federal police can lay charges under money laundering legislation. It is also important to note that the regulation of poker machines is a matter for states and territories.”

According to Roy Morgan’s Gambling Monitor report, poker machines accounted for 60 per cent, or $9.8 billion of the $16.3 billion spent by Australians on gambling in the 12 months to March 2014.

Senator Xenophon, who has long campaigned against pokies, has previously described state and territory governments as “hopelessly conflicted” on the issue of poker machine regulation due to the $4 billion a year in gambling taxes they receive.

Have you witnessed suspicious activity around poker machines? Leave your comment below or email the writer at frank.chung@news.com.au